SCS: What's Happening on November 4, 2021
Cassasava Sciences rips 50% higher after Quintessential short report. Those short sellers are probably hurting, unless they, you know, covered into their report.
I wrote about the Aphria Short Report by Hindenberg Research and Quintessential Capital earlier this week from a couple of years back. The next day Gabriel Greco issued a short report on a company called Cassava Sciences (NASDAQ: SAVA) whose lead therapeutic product candidate, simufilam, is a blood-based biomarker to detect Alzheimer's disease. They recently completed their Phase 2b clinical trial, with solid results.
In the short report, Quintessential alleged the drug Simufilam was based on "forged" scientific research and "cherry-picking" of patients. The stock went from around $67.48 to a low of $51.78 the next day.
It even got an endorsement from Nate Anderson himself (founder of Hindenberg).
Today Cassava Sciences issued a statement telling us they were ‘informed by the Journal of Neuroscience that there is no evidence of data manipulation in an article it published in July 2012 describing a new approach to treating Alzheimer's disease.’ I guess that means it’s all good right? Sigh.
“I’ve never doubted the integrity of our people or science,” says CEO and President Remi Barbier.
And just like that, presto, the stock is now up over 50%.
Ortex data tells us that 9.4M shares are currently short, which works out to 25.93 percent of the float. Seeking Alpha tells us this is a MEME stock. Color me doubtful! I scanned various boards and didn’t find much. Either those funds covered into their report yesterday (likely) or managed to convince the market they were squeezing someone.
So in summary: We were told the company had manipulated data. The company said that the data wasn’t manipulated, based on information from the Journal they used. Meaning everything is back to where we started. Expect the stock price is like 30% higher. I mean, what’s changed man?
Greco makes sure to lets us know that Cassava’s “prominent clinical research site (whose CEO is coauthor of critical research on Simufilam), IMIC Inc., is co-owned by a former escort, stripper and crack addict with a criminal record for consumption and possession of cocaine.”
Apparently, this is odd in capital markets. Because no one has met a banker or short-seller addicted to cocaine who runs in circles with escorts and strippers.
Macro: The Macro Themes Surrounding Equities
California looks to natural gas to keep lights on this winter (RTS)
White House says Opec risks imperiling economic recovery (FT)
Large-Cap News We Can’t Ignore
Moderna drags COVID-19 vaccine developers lower after slashing outlook (SA)
Tesla and Hertz are still working out details on the electric car order (SA)
AMC stock dropped to Underperform at Wedbush, which expects retail crowd to cash out (SA)
Facebook has already announced its first acquisition as Meta (QZ)
Ford to repurchase up to $5 billion in junk bonds as it restructures its balance sheet in hopes of restoring credit rating (CNBC)
Small Cap News
Financial Website NerdWallet Prices US$130.5 Million IPO (TDD)
Avant Brands Reports Resignation Of Chief Financial Officer (TDD)
Ackroo releases Q3 2021 Financial Results with 11% YoY revenue growth (GNW)
Cybin Granted DEA Schedule I Manufacturing License (BW)
Planet Fitness Shares Jump; Q3 Report Shows Return to Gyms (Nasdaq.com)
Canadian Small Caps With Jay Lutz
With the United Nations’ annual climate change conference currently taking place - you know, the one where the worlds elite all take their private jet to somewhere over in Europe to talk about how the common folk are destroying the environment - Canada’s oil and gas sector, and the sector at large, has found itself in the news yet again.
It appears that the government has become hellbent on damaging its own economy, by putting in place further restrictions on one of the most ethical regions globally for producing black gold. It was announced this week that Trudeau is imposing a hard cap on emissions from the sector, because evidently that’s the solution to the problem.
The move is part of Canada’s contribution to limit the rising global average temperature, despite us contributing less than 1.5% of the worlds greenhouse gas emissions globally. Regardless of the major impact this will have on our economy, and the miniscule, if any, impact on global emissions, this has been the path chosen by our fearless leaders to combat the crisis.
Now, while I could go on a long diatribe about how this further highlights Trudeau’s disregard for western Canada, or how Canada will still consume oil just the same and instead will ship it halfway around the globe from jurisdictions that don’t give a hoot about their emissions, presumably resulting in a net negative impact on emissions globally, I won’t.
In the interest of remaining focused on small caps, particularly those listed in Canada, the new proposed regulations instead suggest that investor dollars may be better spent elsewhere. The rising price of oil (which we Canadians will now be further impacted by) nevertheless is something investors will want to gain exposure to.
For that, it may be best to look at locally listed names that have their operations hosted overseas. While this means investor dollars are effectively leaving Canada to maintain operations abroad, the regulatory risk within Canada continues to rise. Growth here has now been further limited, thereby making international jurisdictions much more appealing for those looking to get in early on the next Enbridge or Suncor Energy.